The carbon trading dilemma

Here’s my thoughts on the Emissions Trading Scheme. I’m not a climate scientist or an economist, so I need to admit that I don’t really get all the technical details of how the scheme should work or what the solutions are to the negotiation impasses that Jeanette seems to have reached this week.

I tend to prefer a trading scheme to a tax because theoretically at least a trading scheme limits the amount of carbon emissions whereas a carbon tax just imposes a cost. A trading scheme also allows for a bit of carrot as well as stick. (It recognises that there are economic opportunities, as well as costs in a low carbon or carbon neutral economy).

That said though the carbon tax vs trading scheme boat sailed long ago taking with it a lot of Labour’s credibility on climate change issues. The current scheme is deeply flawed. If you had to pick two areas of the economy that you could not afford to play pork barrel politics with over climate change they would be transport and agriculture, and yet that is exactly what the government is proposing to do.

The financial assistance for warm dry homes is good and equitable. But it doesn’t overcome the hurdle, in my mind at least, of how you have an effective trading scheme when some people in the scheme are allowed to produce for free and others have a cost imposed.

Imagine a fish trading scheme where the government said a certain amount of fish could be caught and fishers could buy and sell those rights among themselves, but one fishing boat was allowed to ignore the rules and catch as much as it wanted. What would the outcome be?

I think the Greens have got two questions to consider. First the strategic political question – what is it best to do before the election? And the Machiavelli in me says that caucus should vote against the ETS, differentiate itself from flawed Labour greenwash and force all the other parties to come up with a real trading scheme that doesn’t look like it would leak like a sieve.

But the second question is the ethical political one – what decision will be best for the climate? And I guess this turns on two points:

  • Is this something on offer better than nothing?
  • And can a deeply flawed trading scheme can be amended and improved after the election?

If it is better than nothing, it’s not much better. From National’s policy to date I can’t see them improving the Emissions Trading Scheme in a climate friendly way shortly after the election, especially once Labour has already put something in place allowing them to avoid the political debate. And I can’t see Labour backtracking on their own legislation and admitting they got it wrong either.

Despite that I’m reluctantly leaning towards favouring caucus voting for the ETS. If Pachauri’s timeframe is correct, or even the 100 months one, then we need to act now and then again, rather than instead, immediately after the election. It’s a long shot that we’ll come up with something that will work but the immediacy forces us to give what we have a go now rather than wait another year. So that’s my answer for now, but it doesn’t ‘feel’ right so I’m happy to be convinced otherwise.

Should the Greens support the Government’s ETS?

The Green Party is asking for public feedback on whether it should support or oppose the Government’s proposed greenhouse emissions trading scheme – see Jeanette Fitzsimons’ media release today.

My personal preference is for a simple “carbon” tax on greenhouse gas emissions (including N20, which is not actually a carbon compound).

Failing that, I could live with a strong emissions trading scheme with rapid introduction of transport and agriculture.

The Government’s scheme doesn’t do this, and there seems to have been little progress through negotiations between the Greens and Government in strengthening it.

I don’t agree with Chris Trotter’s analysis. To the contrary, I actually think the Greens could be dumped into the same greenwash bucket as Labour and National and be seen as abandoning their environmental roots if they support an ETS that is ineffective.

Having nothing to differentiate themselves from a weak Labour response to climate change will imo likely cost the Greens votes, rather than gain them.

Sure, Labour may go into “attack advertising” mode agaisnt the Greens, but that actually helped the Greens when National under Shipley did it in 1999. The EB’s effort at the last election was more of a mixed blessing, but I think that also did not do the Greens much harm – maybe cost one seat.

We can always start again after the election, and while I agree that urgent action is necessary on climate change, I don’t think a one year delay in the introduction of an ETS (or even better, a carbon tax, if the Greens can get enough electoral support to get that on the table again) would be particularly significant if we can bring forward the dates that transport and agriculture actually start paying for their emissions.

The other difficulty with supporting a weak ETS is that it is very hard to undo even if the political climate swings in favour of the Greens. People acquire property rights through an ETS, and you can imagine how some of them will bleat if there are future proposals to legislate over those property rights to implement more effective measures to curb greenhouse emissions.

The Greens are seeking feedback on this issue over the next few days. Their caucus needs to make a decision next Tuesday. So post responses here on whether you think the Greens should support the Government’s ETS, but also email them to

Shadbolt, Tim

In recent years, the Mayor of Invercargill has said some very conservative things, for an ex-radical protester. He seems to have tucked away his ‘stirring stick’ and adopted the mantle of an atrophying rightwinger, attacking the Clark government over many things. Shadbolt is a natural zig-zagger though and two of his recent pronouncements show that somewhere beneath that Tory-suit he has pulled on, there still beats a heart with at least a drop of red blood in it with perhaps the hint of green in there as well.

Exhibit A – (from his ‘In the Hot seat’ column)

“This week I’m wrestling with carbon emissions and I believe the answer lies in the soil which is not in a steady state, but is crying out for more carbon.”

Exibit B- (Southland Times article, “Meeting will study nuclear fallout”)

“The possibility of nuclear fallout over Southland if Australia converted to nuclear power would be discussed at the next civil defence meeting, Invercargill Mayor and civil defence deputy chairman Tim Shadbolt said.”

It’s slim pickings I know, but we’ve not quite given up on Tim yet!